What’s best for you - renting or buying a home?

The majority of Americans in this country own a home, but should you? That’s a question that everyone must ask themselves as they consider
their first home purchase. There is no single answer for everyone - it depends on your special situation.

Financial Impact: The two biggest financial benefits to buying a home are:

It’s an investment that historically has increased in value, building wealth for the homeowner. The U.S. average for real estate appreciation from 1963-2006 was 6.3%. (U.S. Census PDF) The chart below shows the positive impact a home can have on net worth.

You can save money on your taxes each year because the largest expenses that come with being a homeowner are usually tax deductible*, including property taxes, mortgage interest paid, and other miscellaneous expenses.

Average net worth of homeowners vs. renters

Annual Income

Owners

Renters

$80,000 and up

$451,200

$87,400

$50,000 to $79,999

$194,610

$25,000

$30,000 to $49,999

$126,500

$10,600

$16,000 to $29,999

$112,600

$4,240

Under $16,000

$73,000

$500

Source: VIP Forum, Federal Reserve Board

As you can see from the chart, when you pay rent, it does very little to build your net worth - you are actually helping your landlord build his
wealth! In addition, you have no control over rent increases or the whim of a landlord. When you own a home, you have the option of locking in your
monthly payment for 15 or 30 years, making it much easier to plan a budget.

However, the truth is that homes can be expensive to own and maintain. You simply may not be able to afford the cost of owning a home: property
taxes, homeowner’s insurance, private mortgage insurance (PMI) for those with less than a 20% down payment, and annual maintenance costs and repairs.
The bottom line? As a long-term investment, buying a home has proven to improve your financial situation.

Flexibility and Freedom: Both renting and owning give you flexibility and freedom, but in completely different ways. Owning a
property gives you the right to make changes to your home, including decorating, landscaping, and remodeling. As a renter, you are very
limited in what you can do - after all, it’s not your home! On the flip side, when you rent, it’s easy to move without the worry of selling.
You are not tied to a home or a mortgage.